Stock exchange booms, but...

Stock exchange booms, but...

Wednesday, November 13, 2019

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Dear Editor,

When you compare stock values to gross domestic product (GDP) as a ratio, the degree of correlation should indicate whether the Jamaica Stock Exchange is performing one of the main functions of finance, that is providing capital for economic growth.

Despite the performance of the stock exchange since 2015, poverty has increased by double digits if you factor in purchasing power parity when the dollar is devalued.

All successive Jamaican governments have been doing is redistributing wealth created outside of Jamaica by hard-working Jamaicans overseas. Hence, devaluation, as the only policy instrument to create growth in the Jamaican economy, has failed miserably as the International Monetary Fund (IMF) signals the alarm.

“Jamaica's record-low unemployment isn't translating into higher economic growth because of the types of jobs being created. That's according to the IMF mission chief to Jamaica Dr Uma Ramakrishnan,” was the report on a radio newscast.

“The Caribbean is a low-growth market that presents idiosyncratic risks to the bank (for example, hurricanes),” National Bank of Canada Financial Analyst Gabriel Dechaine said in a note when discussing CIBC.

The Jamaica Stock Exchange is booming in a low-growth, low-wage, and low-productivity economy. This is why Bank of Jamaica Governor Richard Byles is quoted as saying the country needs to create high-value jobs.

We need to look into the numbers.

Silbert Barrett

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